Powell: FCC forging ahead on VOIP rules

STANFORD, California - Bills to clarify the regulation of VOIP (voice over Internet Protocol) in the U.S. Senate and House of Representatives probably won't go up for consideration in Congress' current session, but the Federal Communications Commission (FCC) hopes to make progress on the issue by the end of this year, FCC Chairman Michael Powell told Silicon Valley entrepreneurs and venture capitalists on Tuesday evening.

The question whether VOIP should be treated as a telephone service or an information service has implications for taxation as well as issues such as 911 emergency call services and wiretapping. Senator John Sununu, [cq] a New Hampshire Republican, has introduced a bill in the Senate that would exempt VOIP from most regulation. A House bill sponsored by Representative Charles "Chip" Pickering Jr., a Mississippi Republican, has a similar aim.

An FCC public comment period on VOIP closed Wednesday. The agency expects to look at the comments and make some decisions on the issue by the end of this year, though some aspects of VOIP regulation, such as how much a carrier must pay to terminate a call, may not be settled for years, FCC policy chief Robert Pepper said in an interview Wednesday.

Congressional action is the surest way to clarify VOIP regulation, Powell said at Always On Network LLC's AO2004 conference at Stanford University. The FCC can take bold action but can also be sued under the claim that its moves violate the Telecommunications Act of 1996, he said.

Another VOIP battleground is in state governments, which have fiercely resisted giving up their traditional telecommunications taxes and regulations when it comes to VOIP, Powell said. The fight is likely to be heated, he said.

"This is the Internet tax moratorium times 1,000," Powell said.

States should not regulate VOIP, at least in terms of economic issues such as pricing, Powell said in an interview later at the event.

"As far as economic regulation ... I'm skeptical about regulation of that at all, but if it is, to me it's a federal issue," Powell said.

"I think we're going to do this nation a big disservice if we try to chop the Internet into 51 pieces and every state is allowed to regulate economically any way it chooses. That's no indictment of states, only as the good of the whole won't be maximized," he said. "You're going to have a hard time. It's one thing to say, 'Should you do it?' but I don't even understand how they would do it."